Saudi Arabia: The Taxman Goeth

Royal Decree M/13 struck the 4 million foreigners living in Saudi Arabia with the force of a sandstorm. Prompted by sagging oil prices and a projected $10 billion budget deficit, King Fahd declared by edict last week that foreigners, including 35,000 Americans, must pay income taxes of up to 30% for individuals and 45% for companies.

But His Majesty did not count on the reaction of the thousands of expatriate doctors, engineers and other skilled workers. Upon hearing the news, for example, the entire medical staff at a Riyadh hospital threatened to resign. Within 48 hours, Fahd had rescinded the decree. Although the door was left open for a future income tax, the Saudis seem to prefer losing the money rather than the labor.